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Today, I paid off more student loans than ever before: $4,000, to be exact. This hefty deposit was made directly to my loan servicer, which will pay off federal aid debts. In May 2013, I had nearly $40,000 in debt. I was careening out of control, and my only solution was to take out more student loans. Instead, I started Frugaling and changed my entire financial future.

Even though I’m making more money than ever, it’s important to safely and smartly pay off debts. While it’s best to prevent excess debt via proactive budgeting, paying it off can be dangerous, too. In my situation, I paid off this huge chunk of debt by following the proceeding five essentials. Hopefully these will help you to safely pay off more student loans than ever!

1. Pay Off Active, High Interest Student Loans

Okay, I’m going to get a little technical here. I have two types of federal aid: A and B. My “A” loans are subsidized (no interest gaining) until I graduate from school. Unfortunately, my “B” loans are a running taxicab of interest and piling debt.

The first goal needs to be paying off high interest student loans that are active. My “A” loans are not active, and as such, do not need to be the focal point. Meanwhile, my “B” loans are ticking along at about 6.7% APR. All my energy and funds are going towards these second, active interest loans right now.

2. Pay Off As Much As Your Budget Can Bear

It’s tempting to start taking some of my newfound money and buy things. Somewhere between things I don’t need and things I’ve long wanted – oh, how wonderful that would be to buy the unnecessary but awesome!

To prevent this human reaction, I’m digging deep and paying off an uncomfortable amount of student loans every month. It hurts to pay this much because I feel uncomfortable having this little in my savings/checking accounts. Conversely, it helps me pay off more each month, and prevents needless purchases while my budget is being corrected. The less access to money you have, the less you’ll spend!

3. Subsidized Loans Are Free Money While In School

The “B” portion of my loans are my enemy, while “A” is a friendly sort. My student loans started out as a subsidized group, when the country cared about educating the masses affordably and fairly. That’s sort of changed.

I have $8,500 in subsidized loans that are protected from gaining interest until I graduate. Phew! This mass is scary and will be a priority at some point. While I’m in graduate school, I’ll aim to stock up my bank account, build an investment portfolio, and diligently follow my budget. Later, after I graduate and the interest becomes active, I’ll redirect this built up liquidity to quickly pay off the rest of my loans.

4. Keep Some Handy For Emergencies/Tax Season

This might seem contradictory, but part 2 says pay as much as you can possibly bear. Does that mean you should scrap any emergency funds to pay off student loans immediately? Well, it depends on your liabilities.

As a car owner, with certain financial obligations, I need to have some money on hand in case something goes awry. Likewise, this is the first tax season where I’ll be paying Uncle Sam. While I’m happy to do it, I need to prepare for significant budget buster in mid-April (when my payment is scheduled). The key here is to pay as much as you can, while insuring yourself against totally tragedy.

5. Recognize Your Accomplishments

Bring in the reinforcements! Good habits are largely built from strong, positive reinforcement behaviors. Pavlov and Skinner are the two psychologists credited with founding the field of classical and operant conditioning. If you’ve ever taken a psychology course, you’ve likely learned about them.

Those two stodgy, crotchety scientists were pioneers in the field of education and behavior management. Skinner’s operant conditioning reinforcement schedules are as important as ever. Simply put, when you’re done paying off a significant chunk of student loans, reward yourself! Today, mine will be an extra coffee before work. What’s yours?

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Photo: edwardhblake/flickr

This is a guest article from Stefanie! She’s trying to find ways to stretch her budget in one of the most expensive cities out there, New York City. A graduate of New York University’s drama and psychology programs at the height of the financial crisis, Stefanie discovered the world of financial planning out of necessity. Thanks for sharing your insight, Stefanie!

When we discuss renting versus buying, it’s typically in the context of the housing market. Today, we’re going to look at it from a different angle. Thanks to the Internet, what you should and can be rented has expanded to include just about everything. Whether you’re looking for an extra income opportunity or you need a specialized tool for a one-time project, be sure to consider all rental opportunities.

Should you rent, lease, or buy a car?

While I would never recommend leasing a car, buying a car (used or new) isn’t always the most cost effective alternative. For those of us who live in big cities, where parking comes at a premium and public transit is readily accessible, short-term car rental may be a better option. The following are some terrific options to get you started:

Relayrides / Getaround. Relayrides and Getaround facilitate person-to-person car rentals. The car owner posts information about their vehicle along with availability and price. When the renter finds a vehicle that suits their needs, they can request a trip time. Once a mutual agreement is made and booked, the renter picks up the car and returns it as discussed. Both sites have a peer review system to rate both renters and vehicle owners.

Zipcar. Zipcar offers car rentals through a membership program. With the flexibility to rent by the hour or the day and many convenient locations, Zipcar is a great option for someone who needs occasional automobile access.

Lyft. Skip the rental altogether and opt for on-demand ridesharing with the touch of a button. Lyft is an app that allows passengers to connect with nearby drivers to get where they need to go. Depending on the city, Lyft rides are donation based or have a set price.

Of course, if you own a car (and you can tolerate the risk of a stranger driving your vehicle or riding alongside you), you can get in on the other side of the equation and bring in some side income.

Should you rent or buy a bike?

As a city dweller, I prefer to use a bike as my primary mode of transportation, but I have yet to take the plunge on buying my own. I opt for the city bikeshare program that saves me from worrying about storage, theft, maintenance, and traveling with a heavy lock and chain all over town.

When I travel out of town, I prefer to scour craigslist for bike rentals rather than the expensive, local retailers. Sites like loanables and zilok also make it easy to find a bike near you. Alternatively, as a bike owner, you can create your own listing and start generating income off your two wheeler.

Should you rent or buy certain clothing?

There are certain articles of clothing that are only necessary for special occasions. Do you really want to spend a fortune on something you’ll wear once? Rather than splurging on an evening gown that you have to store in your limited closet space, you now have the option of renting designer labels.

Rent the Runway. Rent the Runway offers over 50,000 designer dresses and accessories for short-term rental delivered right to your door. If black tie occasions are not a norm, this is a great option for getting glam for a fraction of the price.

Despite the awesomeness that is rent the runway, I have to go for the buy option on my formal apparel. I have between one and three black tie affairs to attend annually. Each of my evening gowns have seen enough wear to cover the cost of a one-time rental. And for the men, no one will bat an eye if you wear the same tux twice. Go ahead and buy one already – just remember to maintain your figure!

What about equipment, tools, and everything else?

In addition to bikes, loanables and zilok allow you to rent just about anything. From Xboxes (which can be up to $500!) to sewing machines to ladders to kitchen aid mixers, determining which items to rent, which to buy, and which to list, will always depend on your specific needs, circumstances, and risk tolerance.

Whatever you’re considering, think about these questions:

What is your projected cost per use of the item?

Are you willing to invest the time and energy to make a rental income off your item?